Once you've found a house you like and have the financial resources to buy it, you must decide how much to offer. In putting together your actual offer, consider the following factors: A) The advertised price of the house. Treat this as only a rough estimate of what the seller would like to receive. Some sellers deliberately overprice, others ask for pretty close to what they hope to get and a few under price their houses in the hope that potential buyers will compete and eventually overbid.

B) What you can afford. When figuring this out, be sure to factor in your share of the closing costs, which will be about 2%-5% of the total purchase price of the property.

C) Prices for comparable houses. Before you make an offer to purchase a property, you should know the selling prices of nearby properties similar to the one you're interested in buying. For reliable comparable prices (called "comps"), keep the following in mind. A "comp" should have occurred within 6 months (the more recent, however, the better). In a market where prices fluctuate a lot, "comps" should be on sale within the last 30-45 days. A "comp" should be for a property quite similar to the one you're interested in, in terms of age, size, type and number of rooms. A "comp" should be within 6 to 10 blocks of the property you want to buy.

Whether the local real estate market is "hot" (prices rising) or cold (prices dropping). In competitive areas, homes sell quickly -- often for 10%, 20% or more above the asking price -- as bidding wars erupt among buyers. In a cold market, you'll have more room to negotiate with the seller and may get a bargain.

D) The seller's needs. Remember that seller does not only consider price as a main factor in their decision to sell. Your ability to close the deal quickly for example, by getting loan approval or lining up inspections in advance of presenting your offer is important. Finally, your flexibility and sensitivity to the seller's needs -- whether it's extending the closing date for a seller who can't move for a few months or paying for repairs may determine the outcome of your offer.

E) How much you're willing to pay. While there are numerous considerations on why you should purchase a property - the current market, the seller's needs, etc nothing should overweigh your own honest assessment of how much you are willing to pay for a property.